Leadership Styles in Business

What are different types of leadership styles in business? Which are the most effective leadership theories that provide best results?

By nature, every good leader aims to find this answers but the answer will never be simple!

In the real business life, there are many examples that show the effectiveness depends on many factors: situations, goals and particular needs, management characteristics, decision-making process and etc.

Instead of choosing one style of leadership, truly effective leaders are able to adjust styles, selecting the one that is needed at the moment.

Here you will find:

  • A list of leadership styles with their definitions, meaning, and characteristics.

Different Types of Leadership Styles: Definitions and Characteristics

1. Autocratic Leadership Style

Autocratic leadership style works today in many workplace environments and situations.

Autocratic leadership (sometimes known as authoritarian leadership) means that one individual controls all the decisions and has total authority. This person accepts very little consulting from other members.

Autocratic leaders make decisions mostly based on their beliefs and ideas and rarely accept suggestions from followers or team members.

Key characteristics of autocratic leadership style:

  • Only the leader have the authority and control to take all decisions.
  • Autocratic leaders rarely delegate tasks to employees and subordinates.
  • Leaders do not consult with followers.
  • The staff doesn’t have a chance to provide their opinions and ideas.
  • Workers’ motivation comes from structured rules of rewards and punishments.
  • Autocratic leaders take full responsibility and full esteem for the work.

Despite the fact that, this style is remindful of the earliest kings and empires, it takes place today in many organizations.

Where?

It can be seen primarily in small businesses with fewer employees.

This type of leadership style might be productive only in companies where the character of work requires very fast decision-making without consulting with a large group of people.

2. Participative/Democratic Leadership Style

Democratic leadership (also known as participative leadership), is a very open and collegial leadership style in which members of the group take participation in the decision-making process.

The members of the group can share their ideas freely amongst the team.

This type requires collaboration between leaders and the followers. Every member has the opportunity to participate, share ideas freely, and discussion is encouraged.

It is based on mutual respect. It concentrates on group equality.

The democratic/participative leadership also means that there is responsibility for leaders and the staff too. The power and authority are distributed between employees and managers.

Truly democratic leaders encourage trust and confidence among followers.

An important role of a democratic leader is to provide democratic deliberation in the decision-making process.

Let’s sum the core characteristics of  democratic leadership:

  • Employees or followers have equal rights in the decision-making process.
  • Create a great environment for collaborative problem-solving.
  • The sharing of ideas are actively promoted by the democratic leader.
  • Democratic leaders respect others’ opinions.
  • The leader effectively delegates tasks to the workers who best fit the need.
  • Trusting followers and employees.
  • Workers often come by nature to the leader for guidance and support.

The democratic leadership works great where a decision is very complex. It is important to have the different areas of expertise and points of view.

3. Transformational Leadership 

Nowadays, transformational leaders are becoming more and more popular and wanted. And there are a plenty of reasons for that.

Transformational leadership means that leaders have the ability to inspire people to achieve remarkable and giant results.

The leader can inspire employees to discover better ways of achieving goals and targets. They can mobilize people to get work successfully done.

Transformational leadership means beginning a positive change in organizations and companies. It is about defining more challenging expectations and achieving higher performance.

Transformational leaders create trust and loyalty in their followers and staff.

Core transformational leadership characteristics and traits:

  • Effective communication skills.
  • Self-motivation setting positive examples and clear goals.
  • High-performance expectations.
  • Sensitivity to followers’ needs.
  • Inspiring a team attitude and environment.
  • Providing support and recognition.
  • Learning people to look beyond their self-interest.

All of these characteristics that define transformational leadership also make it a very good fit for a lot of types of business.

4. Laissez-faire Leadership Style

Also known as delegative leadership, this is a non-authoritarian leadership style. It gives authority to employees. Laissez-faire leaders allow group members to make the decisions and give the least possible guidance to subordinates.

Some business people think that this style leads to the lowest productivity among group members and it is the least effective type of all management styles.

The main characteristics of laissez-faire leadership involves: 

  • Very little guidance and directions set from leaders.
  • Absolute freedom for group to members to make decisions.
  • Team members are supposed to resolve problems on their own.
  • Highly skilled and well-educated staff.
  • Trust base.
  • Leaders provide all the resources needed.
  • Consistent feedback to team members.

Freely translated from its French, laissez-faire means “leave it alone” or “let it be”.

The main presumption is “to build a strong team — and then leaders stay out of the way.”

Organizations or teams led by laissez-faire leaders often work in highly creative businesses. This leadership style is used in startup companies, where innovation is vital.

Laissez-faire leadership can be productive and efficient also in points where staff members are very highly skilled, motivated and capable.

5. Charismatic Leadership

Charismatic leadership is based on the leader’s skills to communicate and behave in ways that reach followers on an emotional way. Charismatic leaders inspire people to do their tasks better.

The charismatic leadership is mainly based on the charm and persuasive skills of the leader.

Charismatic leaders are very similar (but nor equal) to the transformational leaders. Their main difference lies on the audience and accent.

Transformational leaders focus on transforming organizations into the leader’s vision and rely on an existing method of doing business.

Charismatic leaders focus on their moral compass or passion. They are engaged with a large audience and have a deep commitment to positive change in the lives of a huge number of people.

Transformational leaders are often highly charismatic because and able to achieve a significant change in the organization.

Charismatic leaders are very skilled communicators, who are able to communicate to followers on a deep, emotional level and who are able to attract followers and inspires people to action.

Charismatic leadership involves:

  • Maturity, humility, compassion, substance, and positive body language.
  • Effective listening skills and assertive communication skills.
  • Sensitivity to the business environment and the needs of the workers and followers.
  • Articulate and visionary.
  • Charismatic leaders have the ability to inspire people to work together for a cause.
  • Workers have a clear purpose.
  • Charismatic leaders attract the emotions of the followers.

6. Transactional Leadership Style Definition

Transactional leadership (also called managerial leadership) style is based on maintaining the normal flow of operations and on the setting of clear rules and goals for the followers.

Transactional leader value the structure and processes. They work very well in a structured, directed environment.

Transactional leadership is concentrated with the beliefs that employees are motivated through a system of rewards and punishments.

Transactional leadership is a management approach that focuses on results, supervision, performance and organization.

Transactional leadership is very often compared to transformational type.

Transactional leadership is in deep contrast to transformational leadership, which is based on relationships in which the leader motivates, inspire and develops workers, choosing to influence rather than direct employees.

Transactional leaders are more suitable to command military operations, to lead large corporations, or manage huge projects that require strong rules and regulations. Transactional leaders are not suitable for companies and projects where creativity ideas are important.

Let’s sum the core characteristics of transactional leadership:

  • Rewards and punishments motivate employees.
  • The transactional leader very much values order and procedures.
  • Best fit for structured, directed business environment.
  • The focus is on results.
  • The leader is responsible for maintaining routine.
  • Obeying the instructions of the leader is the main goal of the employees.
  • Workers are carefully monitored to ensure that results are achieved.
  • Inflexible style.

7. Visionary Leadership 

Visionary Leadership involves leaders who are inspiring in vision and helps employees to see how they can contribute to this vision.

Visionary leaders have the ability to calls forth the best in workers and unite them around a feeling of purpose.

Main characteristics of visionary leaders involve

  • Visionary leaders are social innovators, change agents, and good communicators.
  • They possess business acumen and the ability to see the big picture and think strategically.
  • Visionary leaders also have a great charisma.
  • They are also are notable risk-takers and great innovators.
  • Committed to their cause.
  • Employees are inspired to want to be part of something bigger than themselves.
  • Unwavering belief in the mission of the team or cause.
  •  Innate intelligence.
  • Empathy to employees and followers.

A visionary leader is a good fit for companies that are focused on the future and innovations. He is able to create an inspirational vision of the future and attract followers.

Visionary leaders succeed on innovation and positive changes. They encourage creative thinking in employees.

Employees sense and feel motivated by the vision and are solidary within the group because of the cause. Visionary leaders also are able to encourage followers to develop a pioneer spirit.

8. Strategic Leadership Style Definition

Strategic leadership style highly involves strategic thinking.

Strategic leadership refers to the ability to express a strategic vision for the company, or a part of the company, and to motivate employees to understand and achieve that vision.

Strategic leadership is an important tool for creating organizational structure within a business.

Strategic leaders are good at creating an organizational structure, allocating resources, analytical skills and thinking strategically.

A strategic leader carefully analyzes and estimates the alternatives and options for business growth by taking actions. This leadership style requires a very high level of work involvement.

A strategic leader develops a vision for the company that enables it to adapt to changing economics and technological environment. They are able to use this vision to motivate workers and create a sense of unity among them.

Key characteristics that define strategic leaders are:

  • Strong decision-making abilities, goal settings, and driving force abilities.
  • Interpersonal skills, self-control, self-awareness, and effective delegations skills.
  • Strategic leaders very wisely use their power. They develop approval for their ideas and push them gradually.
  • Strategic leaders have a little knowledge about a lot of things and have a wider perspective.
  • Strategic leaders have the ability ti understand the feelings of employees and make business decisions after considering them.

9. Situational Leadership Definition

Situational leadership is a type of management style where the leader must adjust his style to fit the specific needs of a situation and/or employees he is trying to influence.

This is a powerful and flexible way that enables leaders to more effectively influence workers and employees.

Situational leadership means that it is up to the leader to change his style, not the employee to adjust to the leader’s style.

Adaptable to any circumstance, situational leadership involves understanding when a particular management style has a high likelihood of success and when it does not.

An essential ability of situational leaders is the fact that, the style may change regularly to cover the needs of others based on the situation.

Critical situation leadership characteristics and competencies are:

  • The ability to understand and diagnose the business situation.
  • The ability to adjust behavior to the needs of the situation.
  • Communicate with others in a way they can understand.
  • The ability to manage the movement and actions.
  • The ability to move effortlessly from one type of leadership style to another.
  • The leader is able to gain the employees’ trust and confidence.
  • Effective problem- solving skills.

10. Cross-Cultural Leadership Style

As the title suggest, this type of leadership typically exists where there are different cultures in the organization.

It takes place in companies that are working internationally or in various countries with different cultures.

To be successful international organizations need leaders who are able effectively to fit their leadership to work in different cultural environments.

Cross-cultural leadership includes leaders that possess knowledge of the cultural differences and characteristics of different countries.

Nowadays in our globalized business environment, cross-cultural leadership is becoming more and more popular as a huge number of companies are develop their business internationally.

A manager who is successful in one country doesn’t mean he will be successful in another.That is where cross-cultural leadership concept takes a place.

Cross-cultural management is far beyond than being tolerant of different traditions. Managers need to develop new competencies to successfully operate and lead employees from various cultures.

Key traits and characteristics of cross-cultural leaders and managers are:

  • The knowledge how cultural affects beliefs and behavior.
  • Awareness of your own cultural conditioning.
  • The ability to communicate expectations clearly.
  • Being patient.
  • The ability to successfully implementing tools and processes.

11. Facilitative Leadership

Facilitative leadership is a co-creative management style assuming that leaders should effectively facilitate deep collaboration and make things easier and helps to get things done.

Facilitative leadership is a people–centered style, with a focus on developing and supporting a culture in the workplace that facilitates goal achievement.

Facilitative leaders are able to understand how group interaction impacts productivity, to keep group discussion clear and productive, and to ensure clarity of expectations, in terms of goals and roles.

Crucial facilitative leadership characteristics involve:

  • Effective verbal and nonverbal communications skills.
  • Active listening skills and the ability to hear people accurately.
  • Establishing credibility to enable people to contribute with ease.
  • Clarifying and interrogating.
  • The ability to ensure everyone is clear on what result is wanted.
  •  Genuinely and sincerely caring for people.

The approach of facilitative leadership is assertive. It applies to good leadership.

That is why, facilitative leadership is a paradigm that fastly makes its way into more and more companies, governments and institutions.

The more employees are involved in decision making through facilitative leadership, the greater their sense of responsibility and motivation.

About the Author Marin Valchev

Marin Valchev, PMP is an IT Project Manager with more than 10 years of experience. He implements cutting-edge technology in a wide-range of Financial and TELCO companies in Europe, Asia, and Africa. Marin shares his knowledge of software, analysis, project management and other business areas.

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